Foreman Elec. Servs. v. Haliron Power, LLC
| Decision Date | 04 September 2020 |
| Docket Number | Case No. 4:19-cv-4157 |
| Parties | FOREMAN ELECTRIC SERVICES, INC. PLAINTIFF v. HALIRON POWER, LLC DEFENDANT |
| Court | U.S. District Court — Western District of Arkansas |
Before the Court is Plaintiff Foreman Electric Services, Inc.'s Motion to Transfer. (ECF No. 52). Defendant Hailron Power, LLC has responded. (ECF No. 55). Plaintiff has replied. (ECF No. 58). The Court finds the matter ripe for consideration.
This unusual case arises in the wake of devastating power-grid damage caused by two hurricanes in Fall 2017, when the United States Army Corps of Engineers awarded Fluor Daniel Caribbean, Inc. ("Fluor")1 government construction contracts to perform electric utility repair in Puerto Rico. On January 8, 2018, Fluor hired Defendant to serve as a first-tier subcontractor on the project, pursuant to the terms of a written contract between the two entities (the "Prime Contract"). On January 11, 2018, Defendant hired Plaintiff to serve as a second-tier subcontractor on the project, pursuant to the terms of a separate written contract between the two entities (the "Subcontract").
The Prime Contract between Fluor and Defendant contains a forum-selection clause providing as follows:
This Contract shall be exclusively governed by and construed in accordance with the laws of the State of South Carolina, exclusive of the State of South Carolina's choice of law rules. Any claims or proceedings brought with respect to any disputearising from the Contract shall be brought exclusively in the State or Federal Courts located in the County of Greenville, South Carolina, unless expressly designated otherwise within this Contract. The parties irrevocably agree to submit to the personal jurisdiction of the courts located within the County of Greenville, South Carolina for litigating all such claims or disputes.
(ECF No. 42-1, p. 66). The Prime Contract also sets out in detail various standards and requirements for the work to be performed by Defendant on the project.2 Id. at 33-80.
The separate Subcontract between Plaintiff and Defendant contains a few provisions that warrant mention. Section 1.1 of the Subcontract, governing the "scope of work," provides:
The agreement between [Flour] and [Defendant] (the "Prime Contract") . . . and all general, special, and supplemental conditions . . . referred to in, and made part of, the Prime Contract; all addenda and modifications to the Prime Contract; and all other documents forming a part of the Prime Contract (collectively, the "Contract Documents") are incorporated into this Agreement to the extent they apply to the work of [Plaintiff].
(ECF No. 42-2, p. 1). The Subcontract also provides "any dispute arising between [Defendant] and [Plaintiff] shall be addressed using the same procedures outlined in the Contract Documents." Id. at 12. The Subcontract provides further that it "shall be governed by the law in effect in Arkansas," id., and that "[i]n the event of conflicts or inconsistencies between provisions of this Agreement and the Contract Documents, the provision imposing the higher quality, greater quality, or greater duty or obligation on [Plaintiff] governs." Id. at 1.
On September 14, 2018, Defendant sued Fluor in South Carolina state court, alleging that Fluor breached the Prime Contract, inter alia, by failing to pay Defendant for invoiced work done on the project. That case was removed to federal court and remains pending before Judge Timothy Crain in the United States District Court for the District of South Carolina. See Haliron Power,LLC v. Fluor Daniel Caribbean, Inc., No. 6:18-cv-2911-TMC.
On February 20, 2019, Plaintiff filed this case against Defendant in Texas state court, alleging that Defendant breached the Subcontract by failing to pay $7,979,670.16 for invoiced work that Plaintiff performed on the project. On March 25, 2019, this case was removed to the United States District Court for the Western District of Texas. On December 16, 2019, this case was transferred to this Court upon the parties' agreed motion. On April 10, 2020, Defendant filed a motion seeking leave to file an amended answer that asserted counterclaims against Plaintiff.
On April 21, 2020, Plaintiff filed a separate lawsuit against Fluor in the United States District Court for the District of South Carolina, seeking, inter alia, $1,919,610.16 that was allegedly paid by Fluor to Defendant and then not paid by Defendant to Plaintiff for work done on the Puerto Rico project. That case also remains pending before Judge Crain. See Foreman Elec. Servs., Inc. v. Fluor Daniel Caribbean Inc., No. 6:20-cv-1528-TMC.
On April 28, 2020, the Court granted Defendant's motion for leave to file an amended answer in this case. That same day, Defendant filed its amended answer, which contains its counterclaims against Plaintiff. In short, Defendant counterclaims that Plaintiff breached the Prime Contract and the Subcontract in various ways, including its employees' failure to protect materials and equipment, failure to work in accordance with rules and regulations, engagement in recreational drug use, failure to work in a safe and reasonable manner, failure to produce certified payroll and proper invoices, and failure to reduce personnel size and demobilize equipment when ordered. Defendant contends that Plaintiff's conduct caused Fluor to prematurely remove Defendant from the project, costing it millions of dollars and reputational damage.
On June 4, 2020, Plaintiff filed the instant motion, arguing that the Court should transfer all claims asserted in this case to the District of South Carolina, where they will presumably be presided over by Judge Cain. Defendant opposes the motion.
Plaintiff argues that the Court must transfer Defendant's counterclaims to the District of South Carolina pursuant to 28 U.S.C. § 1404(a) and the Prime Contract's forum-selection clause. Plaintiff also asks for the transfer of its claims to the District of South Carolina pursuant to section 1404(a) for the convenience of parties and witnesses, and in the interest of justice. Defendant argues as a preliminary matter that the claims in this case should not be transferred because Plaintiff has waived the defense of improper venue. Defendant argues alternatively that the claims should not be transferred under section 1404(a).
As a threshold matter, the Court will address Defendant's argument that Plaintiff has waived its defense of improper venue by not seasonably asserting it. If necessary, the Court will then decide whether the claims in this case should be transferred to South Carolina.
Defendant argues that Plaintiff has waived its defense of improper venue by not seasonably asserting it. Plaintiff has not sought leave to file a reply addressing this argument. For the reasons that follow, the Court need not determine whether Plaintiff has waived its defense of improper venue because, even if so, that does not prevent Plaintiff from moving for a transfer of venue pursuant to 28 U.S.C. § 1404(a).
The defense of improper Hoffman v. Blaski, 363 U.S. 335, 343 (1960). Ordinarily, the defense of improper venue is waived if it is not raised in a Rule 12(b)(3) motion to dismiss, in the party's first responsive pleading, or the first amended responsive pleading allowed as a matter of course. Fed. R. Civ. P. 12(h)(1).
However, "a motion to transfer the case pursuant to 28 U.S.C. § 1404(a) is not an objectionto improper venue, which under Federal Rule of Civil Procedure 12(b) would be required to be made before answer." Wilson v. United States, No. 4:05-cv-0562, 2006 WL 3431895-GTE, at *2 (E.D. Ark. Nov. 28, 2006); see also Red Wing Shoe Co. v. B-JAYS USA, Inc., No. CIV. 02-257DWFAJB, 2002 WL 1398538, at *2 (D. Minn. June 26, 2002); 14D Arthur R. Miller, Federal Practice & Procedure: Jurisdiction § 3829 (4th ed. 2020) (). Unlike a Rule 12(b)(3) motion to dismiss for improper venue, "a motion to transfer under § 1404(a) can be filed at any time, so long as the motion is made with reasonable promptness." Brown v. Federated Capital Corp., 991 F. Supp. 2d 857, 860 (S.D. Tex. 2014).
Importantly, Plaintiff does not move for dismissal under Rule 12(b)(3) on the ground that the Western District of Arkansas is an improper venue. Rather, both of Plaintiff's requests for venue transfer are made under 28 U.S.C. § 1404(a). Thus, even if Plaintiff waived its defense of improper venue, it may still move for transfer under section 1404(a). Id.; Wilson, 2006 WL 3431895-GTE, at *2. Defendant filed its counterclaims on April 29, 2020, and Plaintiff moved for transfer of venue based on those newly raised counterclaims on June 4, 2020. The Court finds that the instant motion is seasonably asserted, and thus, the Court will now proceed to the merits of the motion.
Plaintiff asks the Court to transfer Defendant's counterclaims to the District of South Carolina pursuant to 28 U.S.C. § 1404(a) and the Prime Contract's forum-selection clause. Plaintiff also asks for the transfer of its own claims under 28 U.S.C. § 1404(a). Defendant opposes both requests.
The Court must begin by determining whether the Western District of Arkansas is a proper venue for this case. This is because "[s]ection 1404(a) applies only if the initial federal forum is aproper venue." 14D Arthur R. Miller, Federal Practice & Procedure: Jurisdiction § 3829 (4th ed. 2020). "Where no special venue statute is applicable, the general venue statute, 28 U.S.C. § 1391, applies." Catholic Order of Foresters v. U.S. Bancorp Piper Jaffray, Inc., 337 F. Supp. 2d 1148, 1154 (N.D. Iowa 20...
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